America is the Big Mac of the global economy.
When America takes action the rest of the world watches. Many people are aware of the Biden Infrastructure Bill that has been approved by the Senate. Not everybody is aware that there is a cryptocurrency section of this new bill. Taxing crypto will help the government pay for the Infrastructure Bill.
The arguments from the crypto community about the changes are mostly centered on one word: “broker.” A broker in simple terms is someone who helps you buy and sell cryptocurrency.
In its current form, the infrastructure bill would deem developers who write code for cryptocurrency, and the miners of cryptocurrency who secure the network, all brokers. It seems harmless — except for the part about how miners and developers would be required to report information to the IRS about users they don’t have the identification details for.
In the next few weeks, discussion will continue and the bill will either be passed or declined. Crypto’s day of reckoning in America is coming, on a day still to be determined in September. Many people don’t understand what this all means. Here’s what is missed and how it could all unfold.
Prices go down like they did in 2017
In 2018 the cryptocurrency markets fell off a cliff. Prices plummeted and didn’t return to where they were until 2020. For those patient people, fortunes were built. For those who easily succumb to fear, fortunes were lost. So much of it comes down to patience and research.
The main event that killed many Lamborghini dreams (search “Lambo, when?” for a laugh) of crypto investors was China’s predictable ban on crypto. The doomsdayers came out from their underground bunkers. The same people who told us fax machines would outlive email, and that electricity was too dangerous and would never go mainstream, took their place on top of their soapboxes.
They pronounced “Bitcoin is dead.”
If the US passes the Infrastructure bill with the new crypto regulations, there could be another panic similar to 2017. Crypto investors won’t be prevented from parking their cash in the asset. But miners and developers will be forced to take their work offshore.
This means America’s Silicon Valley will not be the powerhouse it was in Web 2.0, in Web 3.0. It doesn’t mean the end, but it will cause a lot of fear and uncertainty. That’s when I like to back up the dumpster truck and load up on Bitcoin and Ethereum. You do you.
Prices ignore what happens
Cryptocurrency has a habit of ignoring the news — designed to sell fear and convert it into dollars, while destroying our mental health. In 2020 the Bitcoin halving event happened. (I won’t bore you with the tech talk.)
Crypto influencers all over the globe were saying “this rocket is going to the moon, baby!” Then the big event happened. Silence. One giant snoozefest. Then as the months progressed prices did explode and hit $63,000 USD.
It’s easy to think crypto cares about government events. It doesn’t. The OG of crypto — Bitcoin — came about as a quiet protest against governments creating money out of thin air in the 2008 global recession.
You could say Bitcoin has a vaccine built into the code that protects it from government viruses. And whatever Bitcoin does, for the time being, the other cryptocurrencies follow like good little citizens in choir gowns.
Don’t be surprised if when the US Infrastructure bill passes, there is no drop or huge rise in prices. The don’t give a f*ck attitude of crypto is glorious.
The silver lining of the Infrastructure Bill debate on crypto tax reporting is that crypto will not be outlawed in America. It will be taxed, and lawmakers may push innovation offshore (though there’s still hope), but it’s not going to be illegal.
— Cameron Winklevoss
Regulation of crypto is good. Sure mining and development could move offshore. So what. The value of cryptocurrency is going parabolic too. The combined size of cryptocurrency is now over $2 trillion. That’s why I laugh out loud when people think cryptocurrency will die or be banned. Facebook has more chance of being banned than crypto, amigo.
Why? Well, there’s no Bitcoin office or Bitcoin CEO you can censor, threaten or put in jail. But if you want to ban Facebook you can simply visit Mark Zuckerberg’s office at 1 Hacker Way, Menlo Park, California (google it) and ruin the whole damn company.
Adoption of crypto is exploding too. Even if the Infrastructure bill is bad for crypto, with so many users joining the network, there simply isn’t enough supply. All you need to do to understand Bitcoin and Ethereum prices is basic 5th grader math and the laws of supply and demand.
If you get that, then you understand why prices will skyrocket despite the silly, misinformed actions of one country. One US senator said, “There aren’t five senators in this body with any real understanding of how cryptocurrency operates.”
Yet the infrastructure bill calls all users of cryptocurrency brokers. A first-year intern at a Wall Street bank could easily explain what a broker is. Cryptocurrency is just another financial asset like stocks. Why should the regulation be any different?
Despite all the noise, cryptocurrency prices head higher. The problems cryptocurrency solve are now so important that citizens of countries all over the world must use them.
Here’s the thing that critics get wrong: If you have a child who plays a video game, then they’ve probably already used cryptocurrency and borrowed your credit card to buy it. Cryptocurrency and the underlying technology, blockchain, will eventually become invisible.
Cryptocurrency simply lets us exchange value, interact with one another, and operate on the internet as if it has no borders. The old financial system looks at our name, net-worth, and passport to determine if we should have the privilege of exchanging value.
How do I know? My whole adult life I have worked in finance. Often, the system is simply racist. It’s why many parts of the world are unbanked.
Prices of crypto will go higher as more people see the problems of Big Tech and the centralized model that has given the ownership of our rights and data away to jocks with startups looking to get rich off exploiting our privacy.
The vote on the infrastructure bill that regulates crypto in the US is coming. This day of reckoning in September will be a non-event. It’s highly likely that the bill will be passed in the House of Representatives by people who don’t understand crypto, given the senate approval.
Blockchain innovation will simply move offshore and US financial institutions will continue to engage in crypto, legally, under the new regulations.
The world needs a new Silicon Valley. We now know it won’t be America anymore in Web 3.0. You decide if it makes this upcoming day in cryptocurrency the best or worst one.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.